Iraq Moves to Nationalize West Qurna 2 Oilfield Amid Geopolitical Tensions

The Iraqi cabinet has decided to nationalize the petroleum operations in the West Qurna 2 oilfield, previously managed by Russia's Lukoil. This move comes as Lukoil faces sanctions and impacts from geopolitical tensions. The field is significant, contributing substantially to both Iraq's and global oil supply.

The Iraqi cabinet has taken a significant step by approving the nationalization of petroleum operations in the West Qurna 2 oilfield. This action is in line with a service contract signed with Russian company Lukoil, according to a government statement released recently.

Additionally, the cabinet plans to finance these operations through the Majnoon oilfield account. This account will benefit from revenues generated by crude oil shipments sold by state oil marketer SOMO. Lukoil previously declared force majeure at West Qurna 2 in November, having been impacted by U.S. sanctions amid ongoing tensions surrounding the war in Ukraine.

Lukoil's substantial 75% operational stake in the West Qurna 2 oilfield, which produces approximately 470,000 barrels per day, represented its largest foreign asset. The field contributes significantly, accounting for 0.5% of the global oil supply and 9% of Iraq's total output, further solidifying Iraq's position as OPEC's second-largest oil producer after Saudi Arabia.